Forced Into Caution

The bulls look at the today's action and say breadth was pretty good, there was dip buying, a number of stocks were strong on earnings and the market logged more than 300 new highs.

The bears look at the same action and say stocks were mixed, quite a few stocks faded during the day and the market didn't close very well.

Both sides make valid points -- which is exactly what you'd expect in a market that is showing signs of topping. There are enough positives to keep the bulls pushing for more gains, but there are emerging negatives that are causing conservative investors to tighten up and lock in gains.

I feel ambivalent about the action. The major indices show signs of rolling over, but I'm impressed with the action I'm seeing in individual stocks. I keep warning that we shouldn't be anticipatory, but I wonder if I'm being overly critical of action that really isn't that bad.

What bothers me more than anything are the weak closes, and we now have two in a row after not having one all year. That is forcing me to be more cautious.

Have a good evening. I'll see you tomorrow.

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